Providers: Prepare for the Transition to the 2018 Adjusted Medicare Prospective Payment System (PPS) Base Rate


    Effective January 1, 2017, the increase in the FQHC Medicare PPS rate was transitioned from the Medicare Economic Index to a new measure, the FQHC market basket.  The FQHC market basket is based on information reported on the FQHC Medicare cost reports.  For 2018, the FQHC Medicare PPS base payment rate will increase to $166.60, from $163.49, the base payment for calendar year (CY) 2017.  For CY 2018, the FQHC market basket adjustment is 1.9% and is based on historical data through the second quarter of 2017. 

    In addition, the CY 2017 Geographic Adjustment Factor (GAF) for carrier locality 0118272 (San Diego-Carlsbad) will be corrected to 1.054.  Medicare Administrative Contractors (MACs) are required to mass-adjust all FQHC paid claims for this GAF with CY 2017 dates of service by the end of the first quarter of CY 2018.  

    Full details of the CY 2018 PPS adjustment rate may be accessed here.

    What Does CohnReznick Think?

    To prepare for the transition to the new CY 2018 payment rate, providers should determine if there is a change to their 2018 GAF, update their financial projections and reports to account for any shifts in expected reimbursement, and educate staff regarding changes in expected reimbursement rate effective for dates of service beginning January 1, 2018. Furthermore, all Medicare FQHCs should routinely evaluate their charge master to determine if its fees and G Payment Code charge amounts require updating in its practice management system. MACs  provide a tool to aid FQHCs in calculating GAF-adjusted PPS rate amounts.  Contact or visit the webpage of your jurisdictional MAC to become familiar with this tool.  The self-service tool for National Government Services (the MAC for Jurisdictions K and 6) is available here

    In addition, many states use the FQHC market basket to adjust the PPS Medicaid rate. If this is the case in your state, you will be able to project CY 2018 Medicaid revenue changes as well.


    For more information, please contact Peter Epp, Partner and Healthcare Industry Practice Leader, at [email protected] or 646-254-7411, or Dolores Di Re, Senior Manager, at [email protected] or 646-625-5703.

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    Subject matter expertise

    • Peter Epp

      CPA, Partner, Community Health Leader

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    This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.